TOKYO: Japanese government bonds rose on Wednesday as risk appetite waned among investors on signs that the US presidential race was tightening just days ahead of the Nov. 8 vote.
Caution prevailed ahead of the conclusion of a US Federal Reserve policy meeting later in the day, expected to set the stage for a rate hike in December, and a Japanese public holiday on Thursday. The Nikkei stock index ended down 1.8 percent at a two-week low.
The benchmark 10-year JGB yield edged down half a basis point (bp) to minus 0.060 percent, while December 10-year futures ended up 0.10 point at 151.81.
The curve flattened as the superlong zone strengthened, with the 20-year JGB yield falling 1.5 bps to 0.360 percent and the 30-year yield losing 2 bps to 0.485 percent.
Bank of Japan Governor Haruhiko Kuroda on Wednesday dismissed concerns voiced by some market participants that the central bank's aggressive purchases were drying up bond market liquidity.
"I don't think the market's liquidity has shrunk sharply, or its functions has deteriorated significantly, compared with historical levels," Kuroda told parliament, when asked about the rising costs of the BOJ's massive stimulus programme.
On Tuesday, the BOJ said it plans to keep the amount of its bond purchases in all maturities unchanged from October in its initial market operations in November, after trimming its bond purchases last month by a total of about 200 billion yen.
The BOJ, on Tuesday, refrained from expanding its stimulus despite pushing back the time frame for hitting its 2 percent inflation target.
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